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Financing Cost Tactic

Rate Markup

Dealer-arranged financing may be offered above the lender's buy rate. You may not know the dealer-lender arrangement, but you can compare the contract that reaches your wallet.

Make the Loan Compete

The Simple Version

The buy rate is the interest rate a lender quotes to a dealer for a loan. The dealer may offer you a higher contract rate and may receive compensation based on the financing arrangement. A higher dealer quote is not automatically proof of a particular markup; compare actual written offers.

Get written preapprovals from a bank or credit union before shopping. A preapproval is a comparison point, not a promise that every vehicle and final application will qualify on identical terms.

For each offer, line up the vehicle price, down payment, trade credit, amount financed, APR, loan term, monthly payment, finance charge, total of payments, add-ons, and any prepayment terms. A lower payment can come from a longer term rather than a better rate.

Ask whether the dealer can beat your outside offer, then require the improved terms on the final contract. Do not assume the lender's internal rate or dealer compensation from a payment quote alone.

Counter-move: “I am comparing written APR, term, amount financed, finance charge, and total of payments. Beat my outside offer on the same amount and term, or I will use my financing.”

Immediate Action

Bring a Benchmark

Use one or more written outside preapprovals so dealer financing has to compete on the same term and amount.

Compare Total Cost

APR matters, but so do loan length, fees, add-ons, and amount financed. Compare the entire contract.

Check the Final Paper

Verify the final APR and every number before signing; do not rely on the earlier worksheet or verbal promise.

Sources & Further Reading

Notes: Sources are provided for general education. Rules can vary by state and change over time.

What's Next?

Payment PackingBattle PlansFinancing ScriptsLoan Tools

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Notes: Rules and enforcement vary by state. If a situation feels off, pause the deal and verify everything in writing.